Increase in Authorised Share Capital
Increase in Authorised Share Capital can be done any time as per the provisions of Companies Act 2013 along-with certain amendment relating to capital clause in the Memorandum of Association (MoA) and Articles of Association (AoA).
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Every company incorporated in India shall at the time of incorporation provide details of Authorised Share capital. The Company shall pay Stamp Duty as per applicable stamp act on the total authorised share capital of the company.
Authorised share capital means the company shall issue share as per its own valuation of basic per share price but all is subject to maximum of authorised share capital only.
This Authorized share capital is upper cap beyond which the paid-up capital of the company cannot exceed, in other words any company cannot issue shares beyond authorised share capital of the company.
Steps for increase in Authorised Share Capital:
- If the Articles of Association (AoA) of the company permit to increase authorized share capital then company may proceed for the same, in case AoA does not permit, then the company must amend Articles of Association (AoA) to include the provision for increase in authorized share capital of the company.
- A proper Board meeting must be called with 7 clear days notice containing agenda for increase in authorized share capital.
- At a duly convened Board Meeting following actions must be required:
- Pass necessary resolution for amendment in Articles of Association if AOA does not permit increase in authorized share capital.
- Pass necessary resolution to fix date, time and venue to hold general meeting of the company for passing ordinary resolution for increase in authorised share capital.
- To delegate authority to any Director of the company to sign and to e-file necessary forms for ROC to give effect for increase in authorized share capital
- Draft notice with explanatory statement for the General Meeting
- Authorize any director or Company secretary to sign notice of the general meeting
- Convene a General Meeting and pass necessary resolution for increase in authorised share capital.
- Prepare minutes of the meeting and get them signed by the chairman of the General meeting
- E-Form SH-7 is required to be filed for increase in authorized share capital, this shall be accompanied by the resolution passed at General meeting for increase in Authorized share capital along-with Articles of Association of the company permitting increase in authorized share capital.
- This Form SH-7 shall require payment of stamp duty in accordance with “Indian Stamp Act” calculated upon the total increase in Authorized share capital of the company.
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